Business View: America can't afford to alienate its Arab friends

During the Second World War, Americans of Japanese descent were interned in camps for fear of them being fifth columnists supporting Emperor Hirohito. Yet if anything is going to turn you against your adopted country, it is being treated like this. So when the Americans decree that a bid for a company owning five US container ports by an Arab state-owned group might be a security risk, they are making it more likely that it will become one.

The US administration has gone to great lengths to defend Dubai Ports World's purchase of P&O, owner of the aforesaid five terminals. As even President George Bush points out, the United Arab Emirates has been a strong supporter of the war on terror, so why should its ownership of these ports be a security risk?

Indeed, the opponents of this takeover - including the likes of Hillary Clinton, who should know better - have no understanding of modern history. The US has depended heavily on its Arab allies to pursue its strategic interests - notably the House of Saud, which has supplied "cheap" oil to the West for 50 years.

What America has to fear is turning these Arab allies against it. I was talking to a banker who worked in Bahrain. He told me that one of his friends, a Westerner working for an Arab bank, had to leave because he could not bear his colleagues watching video grabs of Western hostages being beheaded in Iraq. These were attached to emails sent to young professionals by other young professionals, just as dodgy emails of Pamela Anderson did the rounds of UK and US offices before the days of the net nannies.

The banker argues that just as the French and Dutch rejected the ruling elites' vision of an integrated Europe by voting down the EU constitution, so the average Arab is rejecting the slavish support of America shown by the rulers of Saudi Arabia, the UAE and Egypt, for example. Democracy rarely rears its ugly head in the Middle East, so this dissent finds it hard to gain a voice. But as the foiled attack on the Abqaiq refinery in Saudi Arabia showed on Friday, it can emerge in a more virulent form. Resentment against the US is strong and growing.

The American hostility to the DP World deal may have a more immediate effect. According to HSBC research, some $300bn of extra money was thrown off by Gulf countries between 2002 and 2005, and almost as much will be generated this year if oil prices stay high. This massive wall of cash needs a home. Normally, much of it would go to buy US equities, or Treasury bonds, or even assets in America. But if America says Arab money is not welcome, it will go elsewhere.

The high hopes of HSBC

In the same way as Arsenal's famous victory over Real Madrid at the Bernabeu does not cover up the fact that it has been a disappointing season for the north London football team, HSBC Investment Bank's appointment as sole advisers on E.ON's mega-bid for another Spanish icon, Endesa, does not make it a top-rank investment bank.

For a start, Endesa already had seven financial advisers working on defending it from the attentions of Gas Natural, which has three banks on the case. With other potential bidders hovering, the number of available taxis on the rank narrowed quickly. Having a parent company with a big balance sheet and a willingness to lend money for bids cannot have harmed HSBC's cause, either.

A couple of days later, the investment bank was being reorganised for - phew - maybe the fourth or fifth time. This time it is a "two-silo structure", allowing legendary deal maker John Studzinski to be more "client facing".

According to HSBC, this will enable the investment bank to compete with the likes of Citigroup and UBS. And Arsenal will win the Uefa Champions League this year.